2026 Report on Employer Firms: Findings from the 2025 Small Business Credit Survey

Survey Findings

Firm performance and challenges

• Revenue and employment growth held steady between the 2024 and 2025 surveys. Firms continued to be slightly more likely to report that revenues decreased rather than increased in the prior 12 months. These performance indices have recovered somewhat from their pandemic-era lows but remain below prepandemic levels.
• Expectations for revenue and employment growth in the 12 months following the survey both declined to their lowest levels since the 2020 survey. The revenue expectations index fell six points year over year, from 39 to 33, and the employment expectations index fell three points, from 26 to 23.
• Reaching customers and growing sales was the most commonly reported operational challenge, followed by hiring or retaining qualified staff.
• Rising costs of goods, services, and/or wages was the most common financial challenge reported in the prior 12 months. Additionally, more than four in 10 firms reported that increased costs associated with tariffs were a financial challenge. Seventy-seven percent of firms reported one or both of these challenges. Tariff-related cost challenges were most prevalent in the retail (69%) and manufacturing (62%) industries.

International trade

• Forty-eight percent of firms reported that they sourced at least some of their inputs from outside the United States in 2024, while 14% said they did so for more than half of their inputs.
• A large majority of firms with foreign inputs reported year-over-year increases in the prices of those inputs. Firms responded to these cost increases in a variety of ways. Seventy-six percent of such firms reported passing at least some of these higher costs on to customers, while 60% reported absorbing at least some of these cost increases. Relatively few firms reported changing to domestic (13%) or different foreign (8%) suppliers or relocating their production to the United States (3%).
• About one in five firms had sales to international customers in 2024; for most of these firms, their international customers accounted for less than 10% of their total sales. Firms were more likely to expect a decrease (40%) than an increase (16%) in their annual 2025 international customer sales, compared to their 2024 sales.

Debt and credit demand

• The share of firms with no outstanding debt (31%) has grown moderately since the 2020 survey (21%), returning to prepandemic levels. Of firms that have debt, 59% used a personal guarantee to secure their debt, while 51% used business assets.
• Eighty-six percent of firms use financing on a regular basis, with the most common products being credit cards and loans.
• Sixty percent of firms applied for financing in the 12 months leading up to the survey. The most common reasons firms sought financing were to meet operating expenses (56%) or to pursue an expansion or new opportunity (46%).
• Forty-two percent of applicants received the full amount of financing they sought, 36% received some or most, and 22% received none.
• Among the firms that did not seek financing, most said that they did not apply because they already had sufficient funding.

Financing applications and outcomes

• Thirty-eight percent of firms applied for a loan, line of credit, or merchant cash advance in the prior 12 months, nearly unchanged from the 2024 survey.
• The share of applicants fully approved was steady year over year, though it remained below prepandemic levels.
• Among firms that applied for loans, lines of credit, or cash advances, applicants most often sought financing at large banks, followed by online lenders and small banks. The share of applicants that sought financing at online fintech lenders has increased over the last five years, from 17% in the 2020 survey to 29% in the 2025 survey.
• Applicants that sought financing at small banks were more likely to be fully approved (57%) than those that sought financing from other lenders.
• Most applicants that were approved accepted the financing offered. Sixty percent of those that borrowed from online lenders reported that actual borrowing costs were higher than expected, while 4% found them to be lower than expected. Borrowers at small and large banks were less likely to report higher-than-expected borrowing costs (37% and 32%, respectively).
• Credit union and bank applicants were more satisfied with their experiences than were online lender and finance company applicants. Compared to other applicants, those that sought financing at online lenders were more likely to experience challenges with their lender. High interest rates and unfavorable repayment terms were the most common challenges at online lenders.

Use of artificial intelligence

• Nearly half of firms (46%) reported that their business or its employees currently use AI, while an additional 15% planned to begin using it in the next 12 months. One-third of firms have no plans to use AI.
• Of those that use AI, about half said their business is experimenting with AI, while another 44% had partially integrated AI into their business processes. Just 7% of AI users had fully integrated AI into their business.
• The most common tasks for which businesses reported using AI are writing or marketing (83%), followed by individual productivity (61%) and planning or analysis (51%).
• While the vast majority of firms that use AI experienced no change in their labor costs because of AI, 71% said its use led to increased productivity, 39% noted improved quality of goods and services, and 31% reported higher sales.
• For AI users, the top challenges were accuracy (46%) and adapting tools to meet business needs (43%). For firms that plan to use AI in the next 12 months, the top challenges were finding tools to meet business needs (54%) and the time required to implement or train employees on AI (37%).
• Among the 33% of businesses with no plans to adopt AI, over half reported that it is not applicable to their business, while 30% said they prefer not to use it.